Europe epoxy buyers appear un-phased by Olin's decision to suspend production at 190,000-tonne/year unit in Stade, Germany; since 2021, buyers have been making more purchases from Asia on a spot basis due to competitive prices: ICIS

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March 28, 2022 (press release) –

Buyers are surprisingly taking the news of Olin's decision to suspend production at its 190,000 tonne/y epoxy unit in Stade, Germany , for the meantime in stride. The company's move is in response to a dull demand situation and increasing costs.

Customers are not immediately worried about supply despite the temporarily suspension because European buyers have halted buying or curbed volumes from certain high priced sellers in Europe like Olin since 2021 and instead have been buying more Asian import volume, amid very competitive prices, particularly on a spot basis.

Buyers see the company's decision as an attempt to preserve the high European prices despite increasing costs after Russia's invasion of Ukraine because Olin has had the highest epoxy prices in Europe over an extended period so it would normally bear the higher costs albeit more than others.

Immediate supply concerns are being sooth by some epoxy stock of European customers and the expected competitive price rates from Asia at least for Mar 2022 so far.

Some uncertainty on the demand trend over the coming months also emerged, as the war between Russia and Ukraine leads to an increasingly unsettled economic climate and volatile cost environment, with concerns that core market Germany is near recession.

This could additionally affect European demand in an already historically high priced setting. It may not be the high epoxy season participants anticipate in 2022, as they may implement a more cautious approach, if the geopolitical clash persists.

The auto sector were earlier expected to recover in 2022 if supply chain restrictions were to relax, though this is currently increasingly impossible if the war between Russia and Ukraine continues and supply interruption of main component supply from these two nations continues.

It is unclear whether production of Olin's upstream bisphenol A (BPA) and epichlorohydrin (ECH) at its integrated epoxy facility in Stade will additionally be closed for similar reasons for now. However, if BPA and ECH production at the site were to also be affected, this could exacerbate the market tightness for these associated products, particularly ECH, which stays narrow after low stocks following a flurry of high electricity prices and constraints also affecting operating levels in Europe .

Epoxy participants are closely watching the export condition from Asia , particularly in view of new COVID-19 cases in China amid already dull demand.

However, increasing costs in Asia because of less production/supply in Europe and the Ukraine - Russia war could result in a stronger sentiment for new Asian exports to Europe .

Export prices ex- Asia for Mar 2022 shipment stood below EUR 5000 /tonne Delivery Duty Paid (DDP) before Olin's production announcement, particularly for spot from different parts of Asia .

Prices well above this rate were additionally noted from South Korea for direct business. A line graph shows the changes in the European liquid and solid epoxy resins contract prices (EUR/tonne) in standard FD NWE basis from Apr 2021 to Feb 2022 .

Original Source: ICIS Chemical Business,

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